Determinants Of Performance Of Firms Listed At Dar Es Salaam Stock Exchange, Tanzania

Abstract

Tanzania, has invested efforts to establish and strengthen the stock exchange since the early 1980s. This was aimed at developing a functioning capital market for mobilization and allocation of long-term capital to the private sector. This was expected to bring about increased investment activities, efficiency in firm operations and a vibrant economy. The presence of a well-functioning and strong stock exchange has been associated with firm performance across the world, but in Tanzania the link has not been well documented. The study aimed to analyse the impact of listing on performance of firms listed, examine the influence of firm-specific factors on performance of firms listed, establish the link existing between non-financial information disclosure and performance of firms listed, and determine the external factors influencing performance of firms listed. The study employed a mixed methods research approach with an explanatory sequential design. The researcher applied a census approach for all 21 local listed and trading firms and purposive sampling technique to select a total 24 key informant interviewees. Quantitative secondary panel data ranging from 2006 to 2019 were obtained from Capital Market and Security Authority, Dar es Salaam Stock exchange, Bank of Tanzania, and National Bureau of Statistics. Quantitative data were analysed using measures of central tendency and of dispersion, a Matched Pairs Approach, trend analysis and multiple regression with random effect, fixed effect model and Generalized Least Square. Qualitative data were analysed by the use of thematic analysis technique. The study found that the key determinants under investigation significantly influenced performance of listed firms. The study concluded that for listed firms to perform well they should have strategies on the key study determinants since there are benefits that firms get when they are listed in stock exchange in terms of financial and nonfinancial performance. Theoretically, the study extended knowledge by refuting assumptions drawn from the agency theory on the impact of agency cost on firm performance. The study also confirmed the applicability and usefulness of resourcesbased theory, legitimacy theory, stakeholder theory and open system theory in the context of listed firms’ performance.